By Abdullahi Lukman
Global coal demand is expected to level off and begin a gradual decline by the end of the decade as competition from renewable energy, natural gas and nuclear power intensifies, according to a new market report by the International Energy Agency (IEA).
The IEA’s Coal 2025 report, released on December 17, projects that while global coal demand will rise slightly by 0.5 per cent in 2025 to a record 8.85 billion tonnes, consumption will edge lower by 2030, returning to roughly 2023 levels.
The outlook reflects major shifts in the global power sector, which currently accounts for about two-thirds of total coal use.
The report notes that coal trends in 2025 differed across major economies. India recorded a rare decline in coal consumption due to an unusually strong early monsoon season, while higher natural gas prices and policy measures slowed coal plant retirements in the United States, temporarily boosting coal use.
In the European Union, demand fell only modestly after sharp declines in previous years, while coal consumption in China remained broadly flat.
Looking ahead, the IEA expects coal-fired power generation to start declining from 2026 as renewable capacity expands rapidly, nuclear power grows steadily and large volumes of liquefied natural gas enter the market.
Coal use in industry is projected to remain more resilient than in power generation.
China, which accounts for more than half of global coal consumption, is expected to see a slight fall in demand by 2030 as renewable energy deployment accelerates and government policy targets a peak in coal use by the end of the decade.
However, the IEA warned that China’s economic growth, energy policies, weather conditions and electricity demand will remain decisive factors for the global coal outlook.
India is forecast to record the largest absolute increase in coal demand through 2030, with consumption rising by an average of three per cent annually, adding more than 200 million tonnes.
Southeast Asia is expected to see the fastest growth, with demand increasing by over four per cent per year.
The report also highlights growing uncertainty around future demand, including the pace of renewable energy integration, electricity demand growth and the extent to which coal can be substituted in key sectors.
Faster-than-expected electricity demand growth or slower renewable uptake in China could push coal consumption above current forecasts.
On trade, the IEA expects global coal trade to decline as China reduces imports due to oversupply and weaker demand, offsetting earlier reductions by the European Union, Japan and South Korea.
Metallurgical coal is projected to perform more strongly, driven by India’s expanding steel industry.
Amid weaker demand prospects, high stock levels and lower prices, coal production is expected to fall in most major producing countries, including China and Indonesia.
India is likely to be the exception, as the government moves to boost domestic output and reduce reliance on imports.
